Save Article

Bond Move Takes Beijing One Step
Nearer to Floating the Yuan

By

Michael Connolly

Updated Jan. 11, 2007 12:01 a.m. ET

Until now, foreigners generally haven't been able to buy bonds issued in China. If they were able to, they would be taking a bigger-than-usual risk because while China's interest rates are the basis for pricing bonds in its domestic markets, those rates aren't set by the markets, meaning loan rates and other costs of credit are set without much regard for risks such as inflation or default.

But that's about to change -- to the benefit of international investors, Chinese companies and Hong Kong. China says it intends to permit...